Government has directed all ministries and departments to cut wasteful spending and sought a minimum 20-30 per cent dividend from profit making public sector undertakings, as part of fiscal prudence aimed at reducing fiscal deficit to less than 4.3 per cent of GDP.
While banning creation of new posts in all ministries, departments and autonomous institutes, the government also encouraged outsourcing of services like cleaning, maintenance, moving papers and letters.
According to an office memorandum issued by department of expenditure, government also froze spending on maintenance of office building, equipment, office expenses, foreign travel, over-time allowance, telephone, fuel costs and other items to the average level incurred in the last three years.
Purchase of new vehicles has been banned except for Defence and Para Military Forces.
In case of PSUs, the finance ministry memorandum said all profit-making PSUs will declare a minimum dividend of 20 per cent on equity or a dividend pay-out of 20 per cent on net profit, which ever is higher.
PSUs in the oil, chemical and infrastructure sectors have been asked to pay a minimum 30 per cent dividend. The dividend amount would be 20-30 per cent for joint ventures also.
Moreover, PSUs having large cash surplus or free-reserves and no firm reinvestment plans have been directed to pay special dividends, bonus shares and consider stock splits.
Directing all PSUs to recover user-charges, government asked ministries to review the user charges, licence fees, service charges and other documents needed to be filed by all PSUs under them.